Qatar has links to its friends cut in a tiff
Iran ties gall Sunni neighbours
SAUDI Arabia and three other Arab countries cut off most diplomatic and economic ties to Qatar, in an unprecedented move designed to punish one of the region’s financial superpowers for its ties with Iran and Islamist groups in the region.
Oil gained and Qatari stocks plunged after Saudi Arabia, Bahrain, the United Arab Emirates (UAE) and Egypt said they will suspend air and sea travel to and from the Gulf emirate. Saudi Arabia will also shut land crossings with its neighbour, potentially depriving the emirate of imports through its only land border.
Qatar called the accusations “baseless” and said they were part of a plan to “impose guardianship on the state, which in itself is a violation of sovereignty.”
Qatar is one of the world’s richest countries and of strategic importance, being the biggest producer of liquefied natural gas. A country with a population smaller than Houston, its $335 billion (R4.28 trillion) sovereign wealth fund holds stakes in companies from Barclays and Credit Suisse Group. It also hosts the forward headquarters of Centcom, the US military’s central command in the Middle East.
Emboldened by warmer US ties under President Donald Trump, the Saudi-led alliance is seeking to stamp out any opposition to forming a united front against Shiite-ruled Iran. And while yesterday’s escalation is unlikely to hurt energy exports from the Gulf, it threatens to have far-reaching effects on Qatar.
“There are going to be implications for people, for travellers, for business people. More than that, it brings the geopolitical risks into perspective,” Nomura Asset Management Middle East chief executive Tarek Fadlallah said.
Brent crude rose as much as 1.6 percent to $50.74 a barrel on the London-based ICE Futures Europe exchange, before paring gains to 0.4 percent at 8.34am in London.
Heightened tensions between Saudi Arabia, the world’s biggest crude exporter, and Iran typically draw market attention to the Strait of Hormuz, through which the US Department of Energy estimates about 30 percent of the seaborne oil trade passes.
US allies
Qatar’s QE Index for stocks tumbled 8 percent, the most since 2009 at 10.13am in Doha. Dubai’s benchmark index fell 1.2 percent.
The five countries involved in the dispute are US allies, and Qatar has committed $35bn to invest in US assets. The Qatar Investment Authority, the country’s sovereign wealth fund, plans to open an office in the Silicon Valley.
US Secretary of State Rex Tillerson said it was important that the Gulf states remain unified and encouraged the various parties to address their differences. Speaking at a news conference in Sydney, Tillerson said the crisis would not undermine the fight on terrorism.
“What we’re seeing is a growing list of some irritants in the region that have been there for some time,” Tillerson said. “Obviously they’ve now bubbled up to a level that countries decided they needed to take action in an effort to have those differences addressed.”
Yesterday’s action is an escalation of a crisis that started shortly after Trump’s last month trip to Saudi Arabia, where he and King Salman singled out Iran as the world’s main sponsor of terrorism.
Three days after Trump left Riyadh, the state-run Qatar News Agency carried comments by Qatari ruler Sheikh Tamim bin Hamad Al Thani criticising mounting anti-Iran sentiment. Officials quickly deleted the comments, blamed them on hackers and appealed for calm.
Saudi and UAE media outlets then launched verbal assaults against Qatar, which intensified after Sheikh Tamim’s phone call with Iranian President Hassan Rouhani over the weekend in apparent defiance of Saudi criticism.
“Qatar is right in the middle of the Gulf Co-operation Council (GCC) countries and it has tried to pursue an independent foreign policy,” said Peter Sluglett, director of the Middle East Institute of the National University of Singapore. “The idea is to bring Qatar to heel.”
Past Crisis
Disagreements among the six GCC members have flared in the past, and tensions with Qatar could be traced to the mid-1990s when Al Jazeera television was launched from Doha, providing a platform for Arab dissidents to criticise autocratic governments in the region except Qatar’s.
It also played a key role in supporting anti-regime movements during the Arab Spring, acting against Saudi and UAE interests by bankrolling the Muslim Brotherhood’s government in Egypt. Qatar also hosts members of Hamas’s exiled leadership and maintains ties with Iran.
In 2014, Saudi Arabia, the UAE and Bahrain temporarily withdrew their ambassadors from Qatar. That dispute centred on Egypt following the army-led ouster of Islamist President Mohamed Mursi.
This time, Saudi Arabia cited Qatar’s support of “terrorist groups aiming to destabilise the region,” including the Muslim Brotherhood, Islamic State and al-Qaeda. It accused Qatar of supporting “Iranian-backed terrorist groups” operating in the kingdom’s eastern province as well as Bahrain.
Saudi Arabia, Bahrain and the UAE, gave Qatari diplomats 48 hours to leave. – Bloomberg